Pros: An iTunes format movie and music player for high-definition televisions, capable of acquiring content on its own from the Internet or accessing a computer’s iTunes library. Supports playback of high-resolution (720p) rented or user-created videos, as well as streamed or synchronized YouTube, music, photo, and podcast content, using a relatively straightforward interface and 802.11b/g/n wireless networking gear. Runs quiet, consumes little space, and includes Apple Remote; works with iTunes software to let you move certain purchased content back and forth from the device. Now functions as an AirTunes client to stream audio content wirelessly from an iTunes-equipped computer, even simultaneously with other AirTunes devices. Available in 40GB or 160GB versions, more reasonably priced than prior models.

Cons: You’ll have to create, convert, or buy compatible content, based on Apple-limited video format support; YouTube, iPod-formatted, and previously purchased iTunes Store videos can look downright bad on larger HDTVs. Does not include video or audio cables of any sort, and may not be compatible with certain TVs that it can physically connect to. Wireless hard disk synchronization can take a very long time to fill over standard wireless connection, such that 802.11n is strongly recommended. Doesn’t connect wirelessly to other Apple TVs or network storage devices, and integrated USB port does not allow connection of useful accessories such as a keyboard or additional storage. Music playback and photo features are acceptable but not mindblowing; could still benefit from simple tweaks. Small glitches and omissions in certain Store, video and audio features detract from overall experience.

In versions 1.0 and 1.1 of the Apple TV interface, the focus was on letting you enjoy your existing content, combined with limited Internet-based access to movie trailers, short iTunes Store previews, and YouTube content. With Apple TV 2.0, Apple has changed the focus: now the interface is heavily slanted towards helping you to preview and pay for new content from the iTunes Store, with viewing theatrical trailers a distant second, and access to your existing library third.

Apple TV 2.0’s movie rental mechanism is somewhat intuitive. The new Movies option from its main menu initially presents you with six options—Top Movies, Genres, All HD, Search, Trailers, and My Movies—the first four of which are designed to help you find movies to rent from a stripped-down version of the iTunes Store. Standard-definition (480p at best) and high-definition (720p) films are only available to rent, not to buy, based on what we found in the Apple TV version of the Store; you can still buy standard-definition films using your computer and transfer them to Apple TV.

Enter Top Movies and you’ll be shown a set of five promotional banners, 25 Top Rentals, 28 Just Added films, 18 Staff Favorites, and 17 additional genre films, currently “Great Westerns.” You’ll only see the name of a movie in text form if you highlight it with your cursor, otherwise, you’ll have to guess at the content from the box art.

Once you’ve selected a title, you’ll be presented with a scrollable on-screen summary of its content, actors, director(s), and producers, plus the option to watch a preview or rent the title in standard or HD formats. Prices range from $2.99 (SD) to $3.99 (HD) for older movies, $3.99 (SD) to $4.99 (HD) for new releases, and previews we tried were all in unimpressive standard-definition regardless of whether the title was SD or HD. “Also rented” suggestions are also included, and based on what other viewers of the currently displayed film have picked.

If you choose to rent a title, you go through a couple of confirmation screens before arriving at a new Movies sub-option, Rented Movies. This screen shows you all of the rented movies that are sitting on your Apple TV, as well as how much rental time remains. Each film stays on your Apple TV for 30 days from the time it’s downloaded, unless you start playing the film, in which case you have 24 hours to finish watching it. In an effort to encourage further rentals, Apple presents you with a changing, clickable list of other titles people have rented when you highlight one of the movies currently in your library.

There are other ways to browse movies in the iTunes Store. A new Genres menu initially opens with a text-based list of popular movie genres, plus the ability to see all G- or PG-rated films at once. Select any genre from the list and you’ll be taken to a 7x3 grid of box covers, which scrolls down to reveal more covers, displaying the currently selected box’s title as you go.

An option called All HD lets you skip directly to a grid full of box covers for high-definition movie rentals.

Search lets you search the iTunes Store’s movie collection. It uses a small, predictive text keyboard that we found easy to use and efficient at locating iTunes Store rental content. When it’s done finding matching film titles, it searches for the same characters in the names of actors and directors, presenting them under the film titles without forcing you to do any additional work. This system is smart—arguably a lot smarter than showing a bunch of box covers on a black background and having people scroll through them.

Trailers is the next option. You can select from a list of all of the trailers currently available on iTunes, or pick an HD Trailers option to see only high-definition trailers. As before, these trailers are basically there to keep you informed about what’s currently in the movie theaters, and you can’t make any purchases from this section of the Apple TV interface. Trailers briefly cache before beginning to play, and look just like the ones you’ve seen on Apple TV and your computer in the past.

Finally, the My Movies contextual menu shows you the movies you own, in their own separate collection apart from the rentals. The interface here is basically the same as it was in Apple TV 1.0 and 1.1, minus the top-of-screen options for iTunes Top Movies and Theatrical Trailers, which have obviously gone elsewhere.

We would describe the new Movies functionality of Apple TV 2.0 to be generally good, but not great. The best news is that Apple TV is a potentially strong video playback device, with an Apple-provided high-definition video download infrastructure that has the ability to deliver a better audiovisual experience than on-demand HD cable box pay-per-view services (heavily compressed 1080i) and standard-definition DVD players (480p), though the 720p-capped videos sold through Apple TV fall noticeably short of the higher-definition 1080p optical discs sold by competing Blu-Ray and HD-DVD camps. More detailed comparisons of the video and audio you can expect from these options are available here.

Our concerns over Apple TV’s performance with movie rentals were small, but not forgettable ones. During our testing of the HD movie rental feature, we found the transaction component relatively simple, especially once we’d fully entered our iTunes Store account information for storage on the Apple TV—an unnecessary, keyboard-requiring step that iTunes could and should have made simpler. Downloading and playback were also straightforward, except with a couple of hiccups: Apple TV told us that our first test HD rental, “I Now Pronounce You Chuck & Larry,” was ready to play after downloading 2% of its content, then kept stopping mid-way through the movie to load more video. After three stops and starts, we paused the video and went to get something to eat; after a while, we returned and were able to let it play straight through. Since we’re using a very high-speed broadband connection, it’s our impression that the problem was iTunes’s server speed or Apple TV’s desire to make people think that they can start watching even HD content right away; in practice, extra caching time would have improved our experience, and we likely wouldn’t have experienced an issue with standard-definition video.

The single most glaring issue with Apple TV 2.0’s approach to movies is its as-yet-unfinished alternative presentation of the iTunes Store’s interface. From the flat banner graphics to the awkward, title-less cover artwork to the lack of purchasable movies, the Movies interface seems rushed and nowhere near as polished as it could be. While there’s an obvious reason to maintain separate device-specific versions of the iTunes Store for computers, iPhone/iPod touch portable devices and the Apple TV, Apple’s best implementation is still the one on Macs and PCs, and the other devices have a lot of catching up to do—Apple TV especially. It’s obvious that Apple will fix this, but as readers too often have asked us in recent months, the real question is “when?”

Editors' Note: iLounge only reviews products in "final" form, but many companies now change their offerings - sometimes several times - after our reviews have been published.
This iLounge article provides more information on this practice, known as revving.